Techniques for specific engineering business functions

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Reference no: EM13917472

Identify and describe appropriate costing techniques for specific engineering business functions

ACE Engineering Limited manufactures high quality electric drills for use in the medical industry. The financial director is considering next year's production and needs to make decisions based on costing information. The following information is available:-

Wholesale selling price per drill - £40

Materials to produce a drill - £15

Direct labour per drill - £12

Overheads - £245,000

ACE Engineering is planning to produce 25,000 drills next year.

(a) explain the difference between absorption and marginal costing?

(b) calculate the marginal cost per drill.

Reference no: EM13917472

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